Age discrimination in employment: coalition set to unveil plans to cap the amount of compensation that can be awarded in discrimination claims

Excessive payouts in sex, age or race discrimination cases could be reined in under Government plans.

Employment minister Ed Davey will today float plans to end the tribunal jackpot system, which can see businesses crippled by penalties running to hundreds of thousands of pounds.

And, in a major review of workplace law, he will outline plans to slash the amount of time employers have to consult staff before making them redundant.

But, in a move likely to alarm businesses, the Lib Dem minister will announce that the right to request flexible working and shared parental leave will be brought in by 2015 – much earlier than thought.

Just two months ago, his boss, Business Secretary Vince Cable, indicated that the plan had been shelved.

Mr Cable has already announced plans to make it much harder for workers to claim compensation for unfair dismissal in employment tribunals. Now ministers are to extend the restrictions to claims for workplace discrimination on the basis of employees’ race, sex, disability or sexuality.

Mr Davey will announce plans to reconsider awards that ‘encourage people to take weak, speculative or vexatious cases in the hope of a large payout’.

Payouts are presently unlimited. The biggest was £729,347 in a disability discrimination case.

For sex discrimination the top award was £442,266, and the most successful race discrimination claimant won £374,922.

Last year saw a 36 per cent increase in claims for age discrimination, 40 per cent up for race, 18 per cent up for discrimination on sexual orientation, and 20 per cent for religion or religious belief.

The average payout for race discrimination is £18,600, £19,500 for sex discrimination, £52,100 for disability discrimination, £4,900 for religious discrimination, £20,400 for sexual orientation discrimination and £10,900 for age discrimination.

Just one mistake by a small company can see them having to make a huge payout – putting their future under threat. The proposals could risk a battle with the unions. But the Coalition argues that disgruntled staff and their lawyers are exploiting the lax rules to make exorbitant claims.

Mr Davey will say: ‘The areas we are reviewing are priorities for employers. We want to make it easier for businesses to take on staff and grow.

‘We will be looking carefully at the arguments for reform. Fairness for individuals will not be compromised – but where we can make legislation easier to understand, improve efficiency and reduce unnecessary bureaucracy, we will.’

Plans could include imposing a limit on payouts, or making employees pay a fee before bringing a tribunal claim.

The review will also look at reducing the length of consultation over collective redundancy, which currently has to last a minimum of 90 days.

Mr Davey will say this can hinder firms’ ‘ability to restructure effectively and retain a flexible workforce’, leading employers to ‘worry about how long they need to keep paying staff after it has become clear that they need to let them go’.

The review will look at rules which protect employees’ terms and conditions when a business is transferred from one owner to another.

And Mr Davey wants to introduce rules to make work more flexible. His plans to extend the right to request flexible working and introduce shared parental leave would make it easier to work while bringing up a family.